This article is written by RA. Dhanshitha from Symbiosis law school, Pune, 1st year BBA LLB (Hons).
The concept of bailment has been a part of the daily lives of the people from time unknown through a variety of transactions, activities not only in the commercial realm but also in ordinary activities. It could be in the form of hiring (bailment for hire) or also wherein a friend lends his book to another person (gratuitous bailment).
The concept of bailment has been covered extensively in the Indian Contract Act, 1872 under Chapter IX. The main conflict here revolves around the concept of whether only a pre-existing contract would be the threshold for establishing bailment since the Indian Contract Act provides for the same in the definition.
But there are circumstances in our daily lives where bailment could arise by the virtue of a person possessing another person’s property (For example, finder of goods). But the clash is with respect to consensus ad idem which is one of the most important components of a valid contract and contract, in turn, being a part of bailment’s definition. Thus, the concepts to be demystified will relate to consensus ad idem and a contract’s existence when it comes into the new realm of involuntary bailments which the courts have given.
What is bailment?
Bailment as enshrined under Section.148 the Indian Contract Act, 1872 is basically delivering possession of good (movable) to another person under a contract for a specific purpose and a time period, wherein after its fulfilment of the purpose, good has to be re-delivered (or disposed according to directions) to the person who gave it.
The person who is delivering the good is termed as the “bailor” and the person on the receiving end is called a “bailee”.
The very essential point to note here is the existence of a pre-condition which is a “contract” which means that it should satisfy all the requirements as given under Section.10. As under Section.10, it should be a mutual agreement and that is where consensus ad idem comes into picture. (Only if all the conditions mentioned under S.10 are satisfied, does an agreement become a contract).
What is involuntary bailment?
Involuntary bailment happens when a person accidentally leaves his/her property in the possession of another person. According to Norman Palmer, it is when a person is completely aware and knows the fact that he has possession of a chattel, but it had happened through events which he had no prior control over and “no effective prior consent”.
What is consensus ad idem?
Consensus ad idem basically means “meeting of minds” where there is a mutual agreement between the parties while entering into the contract where they agree on the same terms.
Evolution of concepts
Contractual consensual concept (traditional)
Previously the bailment concept was strictly placed under the realm of contract and that was a must to give rise to a bailment. Mr. TA Street had clearly put forth his views on what he termed as “true bailment” which contained that bailment not only required passing of possession but also entailed that it must require a consensual passing from the owner of the goods to a person who is not the owner.
This view was also supported by Blackstone, Jones who reiterated that bailment could only arise out of a contract – implied or expressed.
One of the oldest cases for involuntary bailment is the case of Howard v. Harris wherein a scriptwriter had sent his script to a theatre operator who was unaware about and subsequently lost the script.
The Court held that there was no contract of bailment and there was no duty of care since there was no prior consent since there was no subsisting contract.
In the case of Lethbridge v Philips wherein a painting was delivered to the defendant and he was not held liable when the goods were destroyed because there was no bailment contract coupled with the reason that there was no consent.
In the case of Wechser v Picard Importing Co. wherein a swindler who was sharing a room with two cotenants in the defendant’s name ordered some goods from the plaintiff to be delivered to the defendant’s room.
The second co tenant had permitted the swindler to take the goods even before the defendant had arrived, after which the swindler absconded. Here it was again held that there was no bailment since there was no contract, consent or any sort of mutual agreement. Similarly, in the case of Krumsky v Loeser and Coons v. First National Bank of Philmont, it was held that bailment could not arise unless and until there was an express or implied contract in existence.
This was according to the view that:
- Contract was necessary for bailment and
- A person cannot be made a bailee of a person’s property without prior consent
Due to these reasons, there can be no liability placed upon the bailee at any point of time.
Non contractual consensual concept
For a long time, it was believed that only a contract either express or implied could only give rise to bailment. It also had some connection with the ambit of tort law and the evolution of “detinue sur trover” after which it became the sui generis concept.
Hiort v. Bott was one of the first cases where the court had relied on the concept of involuntary bailment wherein the defendant who had not ordered barley had endorsed it to a fraud who absconded.
The Court in the case of Cowen v. Presspirch followed the non-contractual consensual route. The defendant had placed an order of X bond of the plaintiff, who sent a Y bond by mistake through a runner who dropped the same in the slot in the defendant’s address. But discovering the mistake, the defendant called out for the runner.
But an imposter took the bond and absconded. In this case, it was held that the defendant had entered into an involuntary bailment, even though there was no contract of bailment since the possession was passed to him knowingly and he had the duty of care.
In Heugh v. Northern London Railway & Co, The Court had held that the carriers were involuntary bailees but since they found the goods under some accidental circumstances and they weren’t negligent since they had a lower duty of care. In the case of Foulkes v. New York Consolidated RR, it was clearly stated that it was the lawful possession and the duty to account for another’s property was created, regardless of whether that possession was passed by a contract or not.
What is the logic/basis of involuntary bailment?
Willinston had introduced that “rightful possession of goods by someone who is not always the owner” is bailment. It is not entirely correct but the notion trying to be expressed here is that bailment is something that happens by the relationship (possession) that one enters into with the chattel and is not only strictly based on the contract.
The concept can be explained with what Mr. Cave JR said in the case of R v Ashwell wherein he purported that a person cannot be held liable for the goods while having ‘simple possession (he does not have the knowledge that the owner’s goods are in his possession).
Thus, the liability does not arise until he has the knowledge of it and also assents to that good being in his possession. For example, if a person has left a ring in my car, then I will not be liable until I have the knowledge of the same and eventually assent to it being in my possession.
Again, the reasonability aspect comes in when expressed by Cave JR that a man can expel a stray horse if it was grazing on his field, but should not throw a ring out of his car since he should take reasonable care and prevent it from being exposed to further hazards.
What happens if a person does not want to consent to it? It must be understood that law in some cases gives very little leave to reject it.
In certain cases, “constructive knowledge” can be implied wherein in the case of Ridgley Operating Co. v. White, where the tenant had left his trunk among other things in the hallway of the apartment and the trunk was stolen.
Even though the landlord did not have the particular knowledge of possession of that particular trunk, he had a general knowledge of all the things being in his possession. It was held that even though there was no contract or mutual agreement, it would amount to bailment.
As put forth in the case of Ryan v. Chown, the Court looks at the consent objectively and the court will imply the knowledge/consent even when there was no subjective knowledge/consent. Once that has been established, it is hard to wriggle out of bailment claiming that there was no consent.
But usually, the court is not very harsh and in cases like Theobald v. Satterthwaite, it was held that it was not a bailment when a customer hung her coat in an unattended room which was subsequently lost after the completion of her service since none of them were aware of the coat being there in the salon and the consent was not plausible.
Another case, Hunter v Reed Sons wherein a customer had left 41 dollars and a diamond ring in the shop’s dressing room, he was able to recover from the shopkeeper for the money through implied acceptance, but could not avail it for the ring because the Court restricted it to only things which are carried generally around in the pockets of prudent people.
Sections applicable in India
In India, the sections applicable for involuntary bailment are the same as contractual consensual bailment. I.e. chapter IX on bailment in the Indian Contracts Act. Along with that, another important section that comes into the picture is the quasi-contractual obligation vested on the finder of goods as under Section.71 of the Indian Contract Act, 1872.
This section clearly lays down that a finder of goods has all the obligations of that of a bailee. This point further supports the point that the Indian Contract Act also does not rely upon the old contractual consensual concept of bailment.
Another important factor to highlight is the duty of care placed on the involuntary bailee which is the same as that of a normal bailee as under Section.151, unlike the three levels of diligence as under the common law which also depends on the facts of each case.
Thus, once the finder takes it into his possession, he is consenting to keep the well safe and also must take relevant steps to find the owner, and if after reasonable notice, the owner does not respond, he can part with the goods.
The 13th Law commission report also stated that the law relating to bailment should not be changed but an additional section pertaining to “quasi-contract of bailment” must be inserted so as to clearly specify that even in such instances they would have the same responsibilities of that of a bailor and bailee as under an express or implied contract as provided in Section.148.
Regardless of the “mutual agreement” which happens in the case of a contract of bailment where there is consensus ad idem, as mentioned above, the Indian Contract Act places an obligation on the finder of goods under Section 71 as in the case of the State of Gujarat v Memon Mahmoud, wherein the plaintiff’s motor truck was seized by the customs authorities for non-payment of import duties.
The revenue tribunal decided the case in favour of the plaintiff, but the customs officials had disposed of the vehicles for which the plaintiff sued for damages. Even though the defendants argued that there was no contract of bailment, the Court drew upon Section 71 and took the non-contractual consensual approach by classifying the defendants as involuntary bailees who had to take reasonable care of the goods.
Sometimes there might be a situation when a certain person or an entity might turn into an involuntary bailee from being a voluntary bailee. This could happen in the case of port authorities who are governed by the Port Trust Act, 1963 which clearly mentions the application of the bailment principles as provided for in the Indian Contracts Act, 1963 who will be responsible for the goods.
This could happen in cases where the consignee does not pick up the goods beyond the stipulated contractual time. Thus, in these circumstances, it can be seen that even though there is no particular consensus ad idem, the law imposes certain duties on the person by the virtue of possession of goods of another party.
Even though there is no express or implied “mutual agreement” and or meeting of minds/ consensus ad idem, the position of an involuntary bailee, relies more on the dynamic concept of possession and implied consent by virtue of the knowledge of such possession and does not blatantly disregard the important concept of knowledge.
UK has an Act by the name of Unsolicited Goods and Services Act, 1971. This clearly mentions that lack of response from the possessor of the unsolicited goods does not amount to consent for safekeeping or providing consideration. This extinguishes the possible cases for involuntary bailment as implied consent from the bailee to safeguard the goods. India could pass similar legislation to resolve some confusion with respect to unsolicited goods.
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